Budget 2025-26: A Blueprint for Inclusive Growth and Transformation

Reforming Growth and Investment: Insights into the Budget 2025-26

Central Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman presented the Central Budget for the fiscal year 2025-26 in Parliament, unveiling an ambitious roadmap that promises to reshape India’s economic landscape. The budget outlines major initiatives across various sectors—including agriculture, MSMEs, infrastructure, innovation, education, and health—while also implementing significant tax reforms to benefit the middle class and enhance domestic investment.

Fiscal Outlook and Macroeconomic Projections

The key fiscal estimates for 2025-26 are as follows:

• Total Receipts and Expenditures: The budget forecasts total receipts of ₹34.96 lakh crore and total expenditures of ₹50.65 lakh crore, excluding borrowings.
• Net Tax Receipts: Expected to be around ₹28.37 lakh crore.
• Fiscal Deficit: Projected to be 4.4% of GDP.
• Gross Market Borrowings: Estimated at ₹14.82 lakh crore.
• Capital Expenditure (CapEx): Budgeted at ₹11.21 lakh crore, accounting for 3.1% of GDP.

These figures indicate the government’s intent to drive growth through robust public spending and strategic investments in critical sectors.

Agriculture: The Primary Engine of Growth

Agriculture is at the heart of the budget’s strategy to fuel development:

• Prime Minister’s Dhan-Dhanya Krishi Yojana: In collaboration with states, this scheme will target 100 underperforming agricultural districts by consolidating existing programs and special measures. It is expected to benefit approximately 17 million farmers by addressing issues of low productivity and suboptimal yield.
• Rural Prosperity and Resilient Construction: A comprehensive, multi-sectoral program will be launched to boost rural employment through skill development, investment in technology, and infrastructure improvements. Initially, 100 developing agricultural districts will be included.
• Pulse Self-Reliance Mission: Focused on increasing the self-reliance in pulse production, this six-year mission will target crops such as tur, urad, and masoor. Central agencies like NFED and NCCF will procure pulses from farmers over the next four years.
• Vegetable and Fruit Initiatives: A broad-based program, implemented in partnership with states, will enhance production, supply chain efficiency, processing, and ensure better prices for farmers.
• Makhana Board in Bihar: To improve production, processing, value addition, and marketing, a dedicated Makhana Board will be established.
• National High-Yield Seed Mission: This mission aims to strengthen the research ecosystem and distribute high-yield seeds commercially across more than 100 varieties.
• Fisheries and Cotton Productivity: Initiatives include a framework for sustainable fishing in island territories and a five-year mission to boost cotton productivity through the promotion of longer fiber varieties.
• Enhancing Farmer Credit: The credit limit under the Farmer Credit Card scheme will be increased from ₹3 lakh to ₹5 lakh, ensuring easier access to funds.
• Urea Plant in Assam: A major urea plant with an annual capacity of 12.7 lakh metric tonnes will be set up, supporting the fertilizer needs of the agricultural sector.

MSMEs and Start-Ups: Catalyzing Innovation and Employment

Recognizing the pivotal role of MSMEs in the economy, the budget introduces:

• Revised MSME Classification: Investment and turnover thresholds for MSMEs have been increased by 2.5 and 2 times, respectively, allowing businesses to grow without regulatory hindrance.
• Credit for Micro Enterprises: Customized credit cards with a limit of up to ₹5 lakh will be issued to 10 lakh registered micro-enterprises.
• Start-Up Fund: A new fund will be created with a working capital infusion of ₹10,000 crore to bolster start-ups.
• First-Time Entrepreneur Scheme: A novel scheme will offer term loans of up to ₹2 crore over the next five years for 5 lakh women, Scheduled Castes, and Scheduled Tribes entrepreneurs.
• Focus Product Scheme for Footwear and Leather: A dedicated scheme is aimed at enhancing productivity, quality, and competitiveness in the footwear and leather sectors, promising to create jobs for 2.2 million people and boost exports.

Investment in Infrastructure and Manufacturing

The budget aims to further strengthen India’s infrastructure and manufacturing capabilities:

• Make in India & National Manufacturing Mission: An expanded manufacturing mission will support industries across the spectrum—from small to large—with additional incentives and a proposed 50-year, interest-free loan facility for states.
• Asset Monetization and Jal Jeevan Mission: A new asset monetization plan will mobilize ₹10 lakh crore in capital over the 2025-30 period. The Jal Jeevan Mission allocation is also set to increase, ensuring improved water availability and sanitation.
• Nuclear Energy and Shipbuilding: Proposals include a 20,000 crore nuclear energy mission for the development of Small Modular Reactors (SMRs) and revised financial support for shipbuilding, aligning with maritime infrastructure plans.
• Regional Connectivity and Aviation: The budget includes a revised Regional Connectivity Scheme, targeting the addition of 120 new destinations and catering to 4 crore passengers in the next decade. Plans for greenfield and brownfield airport expansions, particularly in Bihar, are also emphasized.

Investment in Innovation, Education, and Health

The budget takes a forward-looking approach to foster innovation and enhance human capital:

• Educational and Technological Innovations: Initiatives include the establishment of an Artificial Intelligence (AI) Excellence Centre with a ₹500 crore allocation, expansion of IIT infrastructure for 6,500 additional students, and the launch of 50,000 Atal Tinkering Labs in government schools over the next five years.
• Digital Learning and Indian Language Initiatives: The Indian Language Book Scheme will provide digital books in Indian languages, expanding educational access.
• Medical Education and Healthcare Facilities: Plans include adding 75,000 medical college seats over the next five years and establishing 200 day-care cancer centers in district hospitals to bolster healthcare services.
• National Skill Excellence Centers: Five National Skill Excellence Centers will be established to equip youth with skills that support the “Make for India, Make for the World” vision.
• Research and Development: The government has allocated ₹20,000 crore for private sector-led R&D and innovation, along with proposals to set up a Deep Tech Fund of Funds to nurture the next generation of start-ups.

Tax Reforms and Administrative Simplification

Taxation reforms are at the core of the budget’s strategy to simplify compliance and boost disposable income:

• Revised Direct Tax Structure: A simplified tax structure with zero tax on incomes up to ₹4 lakh; 5% for ₹4-8 lakh; 10% for ₹8-12 lakh; 15% for ₹12-16 lakh; 20% for ₹16-20 lakh; 25% for ₹20-24 lakh; and 30% for incomes above ₹24 lakh is introduced. This change is expected to relieve the middle class, fostering increased savings and domestic consumption.
• TDS/TCS Rationalization: The rates and thresholds for TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) have been rationalized to make compliance easier. Enhanced relief measures have been provided for senior citizens and for rental TDS.
• Administrative Simplifications: Proposals include extending the registration period for small charitable trusts from 5 to 10 years and increasing the deadlines for provisional tax determinations. These measures are intended to reduce the compliance burden on businesses and individuals alike.

Boosting Exports and Trade Facilitation

To further integrate India into the global economy:

• Export Promotion Mission: A joint export promotion mission by the Ministry of Commerce, MSME, and Finance will set targets across sectors, supported by the launch of India TradeNet, a unified platform for trade documentation and financing.
• Empowering Emerging Tier-2 Cities: A national framework will be developed to establish global capability centers in emerging Tier-2 cities, driving urban growth and employment.

Reforms in Financial and Regulatory Sectors

The budget also focuses on financial sector reforms and regulatory easing:

• FDI in the Insurance Sector: The foreign direct investment (FDI) cap in the insurance sector is raised from 74% to 100%, encouraging greater inflows.
• NABFIB’s Credit Enhancement Facility: A partial credit facility for corporate bonds aimed at infrastructure projects will be introduced.
• Rural Credit Score Framework: A dedicated framework for assessing credit scores in rural areas will be developed, facilitating easier access to finance.
• Pension and Regulatory Coordination: A new forum for coordinated development of pension products is proposed, alongside the formation of a high-level committee to review non-financial regulations, licenses, and permits.

The Central Budget 2025-26 is not merely an economic statement; it is a comprehensive blueprint for transformation that spans every sector of the economy—from agriculture to manufacturing, innovation to education, and health to infrastructure. With sweeping tax reforms designed to benefit the middle class, significant investments in rural and urban development, and targeted initiatives to foster innovation and skill development, this budget is set to empower India’s citizens and position the country for sustained growth on the global stage.

As the government charts a course toward inclusive development, Budget 2025-26 promises to unlock new opportunities, bolster domestic industries, and enhance the quality of life for millions. By balancing fiscal responsibility with visionary investments, the budget aims to create a resilient, dynamic, and competitive economy that stands ready to meet the challenges of the future.